You may have noticed pensions have been in the news lately:
Finance ministers from across the country recently met to talk about one of Canada’s great success stories, the Canada Pension Plan. Auto workers at multiple car companies in Canada have negotiated better pensions into their contracts. And, former Bank of Canada Governor Stephen Poloz has published a paper on HOOPP’s websitethat says our country may be ripe for a “renaissance” of defined benefit pension plans as they become even more valuable in an uncertain world.
There has also been talk in the news about how much Canada’s largest pension plans – known as the Maple Eight (HOOPP is one of them) – invest in Canada, and whether we should invest more.
You may be curious about how, and where, HOOPP invests your pension dollars on your behalf.
The first thing that must be emphasized is that we invest and manage money solely for our members, Ontario’s healthcare workers. The focus is entirely on ensuring you have a secure and reliable monthly pension when you retire, for the rest of your life. This is both our mission and our legal responsibility. This differentiates us from investment management firms, who have a shorter-term focus on profits and annual returns.
As for our commitment to investing in Canada – it’s strong. Canada is not only our home, but also a safe and stable country that offers attractive investment opportunities. Investors must always weigh risk and reward when choosing potential investments. The greater the risk, the greater the required expected return. With a portfolio of more than $100 billion, the HOOPP investment team conducts these risk assessments and analyses on a large and global scale. All else being equal, we prefer to invest in Canada when the risk and reward are appropriate.
Over $60 billion of HOOPP’s assets are invested in Canada. This includes real estate, such as major industrial and logistics parks, office towers and housing. It also includes supporting Canadian innovation and entrepreneurship by investing in home-grown companies.
HOOPP is also one of the biggest investors in Canadian bonds; they comprise about half our Canadian portfolio, and generate safe and reliable returns. In addition, money raised through government bond sales helps pay for the public services and infrastructure we all rely on – including hospitals, public transit and schools.
Like other major Canadian pension plans, HOOPP invests beyond our own borders. Diversification is one of the first rules of smart investing. You don’t want to put all your money into a single asset, or a single country. All investments have some level of risk, and diversification can help reduce risk. So, while we favour Canada, there are many other safe jurisdictions, including the U.S., Europe and parts of Asia, where we seek opportunities. This diversification helps mitigate risk, enhance returns and ensure we can continue to deliver on our pension promise for decades to come.
There is yet another way HOOPP contributes to the Canadian economy. More than one percent of all Canadians are members of HOOPP, and your hard-earned money is either contributing to the Fund or being paid in pensions. In fact, we paid more than $3 billion in pension benefits in 2022 to Ontario healthcare workers. These dollars help retirees in every corner of the province pay for the things they need, predominantly in their local economies. This is an element of pensions’ economic contribution that is sometimes overlooked.
Canada’s major pension plans, the Maple Eight, are considered among the best in the world. From time to time there may be opinions in the news about how and where these pension plans should be investing. We want to assure you that our commitment to Canada is and will remain strong. In HOOPP’s case, we have been independently investing a large part of our portfolio in Canada for more than 60 years and will continue to do so because it's good business. And our business is delivering pensions and providing retirement security for our members, now and in the future.
